You Have a Value-Weighted Index Made Up of Two Companies

question 16

Essay

You have a value-weighted index made up of two companies. One company, we will call A, has a stock price of $25 per share and there are 10,000 shares outstanding. The other company, we will call B, has a stock price of $100 per share and has 1000 shares outstanding. What will be the percentage change in the index from a 10% increase in the share price of company A? What will be the percentage change in the index from a 10% increase in the share price of company B?

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Definitions:

Business Associations

Represent the interests of organisations in an industry or region.

Occupational Health

A field of healthcare that focuses on the physical and mental well-being of employees in the workplace by preventing and addressing injuries and illnesses that may arise from work activities.

Profit Margins

The percentage of revenue remaining after deducting the cost of goods sold, symbolizing the financial health and profitability of a business.

Welfare Facilities

Denotes amenities and services provided by employers to improve the well-being and working conditions of employees.